" Question 1 A firm, existing for two periods, produces output using capital and labour. The firm's production at any time i can be described by a simple production function zikion}-a. The firm faces the following profit function expressed in real terms: zakan)- + k2 + (82 +d2)ai W2n2 zikan]- + ki k2 + ($1 + d)ao $141 wini + 1+r Qi, si and di denote the quantity and price of shares as well as dividend payments of shares held by the firm in period i in real terms. The firm has to borrow to invest in new capital stock. The amount it can borrow is constrained by the value of its stock holdings: (k2 k) = Rs1a1 where R